Law firms sued after phishing scammers land $4.5-million catch
Montreal firm De Grandpré Chait wired $4.5 million of client’s money to Chinese bank account
Two Quebec law firms involved in a real estate deal have been sued after one of them sent the $4.5-million purchase price to a Chinese bank account as the parties fell victim to an apparent phishing scam.
According to Quebec Superior Court Justice Geeta Narang’s decision in 1024396 Alberta Ltd. c. Mei 2021 QCCS 3465, Montreal law firm De Grandpré Chait LLP wired the funds on behalf of its clients, a group of investors who had agreed to buy commercial property firm Fishman Holdings out of its interest in a building in the city.
Still waiting on its money, Fishman Holdings subsequently sued both De Grandpré Chait and its own lawyers on the transaction at Phillips Friedman Kotler LLP, as well as the purchasers themselves.
The decision says the purchase price for the building was set in excess of $10 million, with a net amount of $4.5 million owing because of the buyers’ existing beneficial interest in the property.
However, following a flurry of emails – some fake and some real – in the week leading up to the Feb. 6, 2020 closing date, the decision says De Grandpré Chait ended up with fake instructions to wire the funds to a Hong Kong bank account in the name of “Hei Brother,” rather than Fishman Holdings’ RBC account in Calgary.
Justice Narang’s decision dealt with a request by the buyers to have the case against them dismissed. Having disbursed the net purchase price to their lawyers, they claimed they had been dragged unfairly into the litigation over the missing money.
“The Real Estate Purchasers are understandably frustrated at being named as defendants in the lawsuits initiated by Fishman Holdings, however, at this point in the proceedings, their Application to Dismiss can not be granted,” she concluded in the recent ruling.
The buyers had compelling arguments to support their case, Justice Narang conceded, noting that the limited evidence available suggested they had lived up to their side of the deal and mandated their law firm to remit the $4.5-million to Fishman Holdings.
Still, there remained the possibility that a trial judge with all the evidence before them could find the purchasers “solidarily liable with the law firm(s) or that they could have done something to avert” the money from ending up in the wrong bank account, she added, pointing to evidence suggesting the buyers may have seen the fraudulent wiring instructions in correspondence sent ahead of closing.
“Who knew what and when, and the impact of their knowledge on the Real Estate Purchasers’ liability are questions best left for the judge on the merits,” Justice Narang wrote. “The same holds true for the issue of whether the Real Estate Purchasers were discharged of their legal obligations when they disbursed the $4,502,393.54 to De Grandpré Chait: the agreement between the parties and their intent as concerns payment must first be determined.”
Alexander De Zordo – who acted for the buyers on the dismissal application – declined an opportunity to comment since the litigation is ongoing, as did Fanny Albrecht, counsel for Phillips Friedman Kotler. None of the other parties responded to a request for comment.
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